My gut feeling is that the leaders at the helm of the ship have no clue as to the depth of the problems O’Connell has wrought on MassMutual. In particular, I believe that the financial results reported during O’Connell’s years will have to be revised significantly downward as a result of questionable accounting practices he encouraged.
I recognize my view is at odds with the fact that MassMutual has said O’Connell’s departure does “not affect the company’s financial strength or its operations.” I simply believe they do not have a handle on the depth of the financial rot.
If it is verified and publicized that O’Connell and/or Ruotolo and/or others were bilking money from mutual funds in the MassMutual stable, the loss of financial assets entrusted to MassMutual and its subsidiaries would hit the company like a giant financial tsunami. The result would be an immediate, critical demand for liquidity. With such repercussions, it is not surprising that MassMutual officials have circled the wagons and hung out a flag suggesting sexual misconduct as the cause of last week’s executive evisceration.
I am also a former employee and would say that Ruotolo, who you refer to as evil, did get the organization to focus and resolve some key issues….only time will tell if good triumphed over evil…bottom line is they still continue have many issues which negatively affect the shareholder of the funds. What has Murphy done?????
I discovered that on the day O’Connell was fired by MassMutual the Vice Chairman and Chief Operating Officer of Oppenheimer Funds, Andrew Ruotolo, was led from his Oppenheimer office “in handcuffs”.
The Oppenheimer Funds are a subsidiary of MassMutual and Ruotolo was listed in the 2004 MassMutual Annual Report as a Senior Advisor to Chairman O’Connell.
The word is that O’Connell brought Ruotolo over from AIG along with the other members of his gang. Ruotolo was then injected by O’Connell into the Oppenheimer Funds like the bubonic plague. Longtime officers and employees were apparently more than somewhat gleeful, therefore, as Ruotolo made his “Perp Walk” in shackles as the flash bulbs popped and the cameras rolled.
The fall from grace of AIG and its chairman Maurice Greenberg (O’Connell’s mentor) has been well chronicled in the press. The lack of ethics and integrity that characterized AIG obviously found fertile ground at MassMutual.
Does anyone know who arrested Ruotolo and/or the reason he was arrested. It has been rumored that O’Connell was bilking money from mutual funds – Ruotolo’s arrest fits nicely into that rumor.
Sources with knowledge of the situation have already denied the pair had been involved. Investigations by the company itself had also found no evidence of a relationship.
MassMutual Board Fired CEO
On Finding ‘Willful Malfeasance’
By JAMES BANDLER and JOANN S. LUBLIN
Staff Reporters of THE WALL STREET JOURNAL
June 10, 2005; Page A1
The abrupt notice of termination given last week to the head of MassMutual Financial Group, one of the nation’s largest financial companies, came after a board
investigation concluded he had engaged in an improper pattern of self-dealing and abuse of power, according to people familiar with the probe.
The probe made several allegations against former Chairman and Chief Executive Robert J. O’Connell, among them that he inflated the value of a special
retirement account by tens of millions of dollars, bought a company-owned condominium at a below-market price and interfered in efforts to discipline his son and
son-in-law, who worked at MassMutual, said people familiar with the probe.
Notice of Mr. O’Connell’s termination rocked the Springfield, Mass., company, which has 27,000 employees and more than $350 billion in assets under
management. The 154-year-old company provides insurance, annuities and other financial products through Massachusetts Mutual Life Insurance Co. and a
number of affiliates, which include such companies as Oppenheimer Funds Inc., Baring Asset Management and Babson Capital Management. As a mutual insurer,
the company is owned by its policyholders.
In announcing its notice of termination to Mr. O’Connell, who had been CEO nearly seven years, the company said only that its action was related to his
“conduct.” Several other executives also have been asked to leave in recent days, said people familiar with the probe.
A spokesman for Mr. O’Connell declined to comment. One person familiar with the matter said Mr. O’Connell disputes the board findings and argues that he did
nothing wrong. This person attributed Mr. O’Connell’s firing to a power grab by a faction of the company that opposed Mr. O’Connell’s leadership, and which
wants to make MassMutual a publicly held company — a step he opposed.
“Not only did they decide to deprive him of his position, but they decided to deprive him of the fruits of seven years of very successful effort,” this person said.
In a statement, new Chairman James R. Birle, a director since 1992, declined to comment on the findings of the probe, but said the board “has a zero-tolerance
policy for any acts … that violate the letter and the spirit of the company’s code of ethics. When we learned of possible wrongdoings and misdeeds by our Chief
Executive Officer, we began a thorough and fair investigation” and later gave Mr. O’Connell a notice of intent to “terminate his employment, for cause,” he said.
MassMutual has said that the matters for which Mr. O’Connell was terminated will not affect its financial strength or its future operations. Stuart H. Reese, formerly
executive vice president and chief investment officer, was named to succeed Mr. O’Connell as CEO.
According to people familiar with the probe, MassMutual earlier this week gave Massachusetts insurance regulators a draft of the 59-page report on Mr.
O’Connell prepared by outside advisers for the board. The company also has alerted regulators in three other states.
The company’s probe was triggered in part by a call to a company director from Mr. O’Connell’s then-wife, said people familiar with the probe.
One accusation against Mr. O’Connell involves a “shadow” supplemental retirement account, which was akin to a 401(k) plan but involved only hypothetical
assets, these people said. Such accounts are commonly granted to top executives.
Over time, such an account’s value increases or decreases based on hypothetical trades made by the executive. No actual investments or trades are made, but the
account represents a future company obligation to the executive. Upon retirement, the executive gets a cash payout equal to the value of the account.
The board probe found that Mr. O’Connell was supposed to be buying and selling only mutual funds and selected stocks in the account, said people familiar with
the probe. Instead, the probe found he improperly credited to the account purchases of big chunks of hot initial public offerings at their original offering prices,
these people said.
In at least one case, the probe found he pretended to buy more shares of an IPO than any real investor was allocated, according to people familiar with the probe.
He also allegedly credited his account with phantom trades of securities after the close of markets, these people said.
The probe found that Mr. O’Connell’s hypothetical account swelled to $30.6 million at the end of March from $4.1 million in late 1998, according to people
familiar with the probe. That’s a 37% average annual gain. By comparison, the Dow Jones Industrial Average gained an annual average of 2.2% over that period.
The board was unaware of the unusual trading and the size of Mr. O’Connell’s retirement fund until recently, said people familiar with the probe. He wasn’t
expected to receive the amount in the account until at least 2008, when he will turn 65, these people said.
One person familiar with the matter said Mr. O’Connell never received a penny from the supplemental retirement account. This person added that the board
approved two amendments allowing more frequent transactions. Mr. O’Connell instigated new restrictions that were imposed on the account last year, this person
said.
This person also said Mr. O’Connell is likely to argue that he believed the phantom IPO transactions were allowed because they were publicly traded securities.
“This was all open and obvious and carried on the books of the company,” this person said.
Mr. O’Connell was a senior executive at American International Group Inc., the nation’s largest publicly traded insurer, when he was wooed to MassMutual in late
1998. He became president and CEO in early January 1999. His 2004 salary and bonus totaled $7.9 million, according to data compiled by the Insurance Forum,
an industry publication.
According to a person familiar with the probe, the board began investigating Mr. O’Connell in early 2004 when his then-wife, Claire, called a director accusing her
husband of an extramarital affair with another high-ranking executive, Susan Alfano.
Said Gerald Nissenbaum, Mrs. O’Connell’s divorce attorney, “It’s not in her economic interests to see him fired. And she would not have taken steps to get him
fired.”
After her call, the board hired an outside law firm to investigate the matter, and no proof of an affair was found, said one person familiar with the probe.
Ms. Alfano stepped down as executive vice president for enterprise systems and services last week. In a statement issued through her attorney, she said, “It is
common in both public and private enterprises for new leaders to be given the courtesy of working with their own team. Any innuendo that my departure was
motivated by an inappropriate personal relationship is malicious and unfounded and harkens back to a 1950s mentality which, frankly, all professional women had
hoped was history.”
After the initial investigation ended, several directors began making their own inquiries into Mr. O’Connell’s conduct, and in February 2005 the board hired a
different law firm, Cadwalader, Wickersham & Taft LLP, to lead a deeper probe, said people familiar with the probe.
Last week, the board met at a hotel near the Hartford, Conn., airport and confronted Mr. O’Connell with a three-page termination notice, these people said.
Among other things, the notice accused him of “willful malfeasance” for his improper use of the supplemental retirement account, these people said.
Another issue cited by the board was the condo deal, said people familiar with the probe. A unit of MassMutual, Cornerstone Real Estate Advisers, has been
developing an exclusive complex in Marco Island, Fla., called Madeira Condominiums. In 2002, Mr. O’Connell and his wife paid the company $4.95 million for a
condo, which remains under construction, according to people familiar with the probe.
After Mr. O’Connell and his wife began divorce proceedings last year, he told Cornerstone he wanted to buy a smaller unit for his own use, these people said. The
unit had been tentatively sold, but the sale had fallen through, these people said. Since the initial sale, Cornerstone estimated the value of the smaller unit had risen
35%, and was planning to keep the unit off the market until the building’s completion, these people said.
The board probe accuses Mr. O’Connell of pressuring Alan M. Connor, Cornerstone’s long-time CEO, to sell him the unit at its original $1.87 million selling price,
said people familiar with the probe. Mr. Connor balked, telling Mr. O’Connell it wasn’t for sale, and at a later meeting told him the transaction was a “bad idea,”
these people said.
Mr. O’Connell said Cornerstone needed to “agree to sell the unit” right away, said one of the people familiar with the probe. As a compromise, Mr. O’Connell
offered to pay 6% more than the original offering price, and eventually ended up agreeing to pay more than $1.88 million, this person said. That was the lower
value of two outside appraisals, this person said.
The board’s investigators concluded this was a “self-dealing transaction,” because Mr. O’Connell never presented it to fellow board members, according to a
person familiar with the probe.
In addition, directors were concerned to learn that, after the contentious condo transaction, Mr. O’Connell allegedly slashed Mr. Connor’s proposed 2004 bonus
from $800,000 to $700,000, said people familiar with the probe.
One person familiar with the matter said the question of how to proceed on the real-estate deal was handled by the MassMutual general counsel’s office, and the
price paid by Mr. O’Connell was determined to be a fair market price by an outside appraiser chosen by Cornerstone.
This person said the decision to cut Mr. Connor’s bonus was based on the recommendation of one of his superiors, not Mr. O’Connell. “Any link between the two
is pure fiction,” this person said.
Mr. Connor couldn’t be reached for comment.
Initially, Mr. O’Connell was allowed to make hypothetical trades in his retirement account four times a year, in a dozen mutual funds, said people familiar with the
probe. In early 2000, Mr. O’Connell got permission from the board to trade as well in 15 listed securities, these people said.
These people said Mr. O’Connell went beyond the allowed trading, sometimes dabbling in hypothetical shares of hot IPOs. Such shares often are coveted, and
are doled out sparingly by underwriters, because they can quickly soar in value.
The board report alleges that when JetBlue Airways Corp. went public in 2002, for example, Mr. O’Connell allocated himself 234,263 phantom shares at the IPO
price of $27 a share, according to people familiar with the probe. The stock opened at $37.52 on April 12, 2002, and closed at $45 that same day. As result, the
MassMutual CEO made a paper gain of about $4.2 million in that single day, according to these people. These people said no actual investors received as many
shares as Mr. O’Connell’s phantom allocation.
JetBlue’s IPO was oversubscribed 20-fold, a person familiar with the deal said at the time, and underwriters increased the number of shares being floated to 5.87
million shares, as well as raising the offering price. The stock’s 67% first-day gain was the largest in 2002 at that point.
MassMutual changed corporate guidelines in 2004 to make it somewhat harder for executives to enjoy big gains from shadow trades in IPO shares. A person
familiar with the probe said the change was made by human-resources officials who were alarmed by the growth in Mr. O’Connell’s account.
Mr. O’Connell also was accused in his termination letter of interfering with an internal investigation and disciplinary action against two relatives, said people familiar
with the probe. Mr. O’Connell’s son, Jared, worked as a low-level analyst at MassMutual’s Oppenheimer unit and his son-in-law, Rex Hampton, worked for
MassMutual, these people said.
Jared O’Connell could not be reached for comment. Mr. Hampton did not return phone calls seeking comment.
People familiar with the probe said a compliance officer at the company uncovered evidence that Jared O’Connell was recommending stocks to Mr. Hampton.
The compliance officer recommended that a letter of censure be placed in Jared O’Connell’s personnel file, because he had revealed proprietary information
outside Oppenheimer, these people said.
Instead, the letter ended up being put in the firm’s less accessible compliance file, people familiar with the probe said. No letter could be found for Mr. Hampton,
these people said.
A person familiar with the matter said Mr. O’Connell had no role whatsoever in the handling of any letters.
Under Mr. O’Connell’s 1998 employment agreement, the board was obligated to give him 15 days notice if he was fired for cause. He is allowed to “cure” the
reasons for his dismissal during that period, which ends June 23. If he fails to correct those issues, he remains ultimately entitled to arbitration.
The board’s termination notice “is subject to contractual rights that I intend to exercise,” Mr. O’Connell said in a statement last week.
Well as someone who’s still here I can say this. HE was having an affair with Sue Alfano. Unless a CEO always walks side by side with his VP’s holding hands and such. If they make us a public company we will go the way Phoenix Mutual went and be dead in no time.
citibank gives up cash for enron debacle.
next will it be mothermutual?
citibank turned a blind eye to enron accounting. it seems massmutual management is guilty of shenanigans.
anybody know/heard of accounting games??
Darla you are absolutely wrong. As a public company you would get to enjoy the fruits of your labors by being a shareholder. The employees of Microsoft, WalMart, Home Depot, Prudential and numerous other public companies have been able to buy stock in their companies at substantial discounts and they have also been awarded stock options. As a result, millions of people have amassed sizeable nest eggs and many have accumulated fortunes. Very few people who work for mutual companies ever make enough to build their net worth.
Whoever planted the seed that you, as an officer or as an employee, were better off by MassMutual not going public was doing you a great financial disservice. I seem to recall O’Connell saying the mutual form was best – it sure was for him because he was paid $7.9 million in 2004, which was more than double his compensation in 2003. Did he double your pay in 2004?
darla you live the great american dream of the 50’s. today compare your thinking with the reality of being an enron stockholder period …not a dream but a nightmare.
Hi Tillie – to be honest he didn’t double my pay in 2004 but likely no one else in that job would have either. I can tell you that the affair was going on for quite some time and I will say that I believe it’s the AIG investigation that is the main reason why he was let go and that the “excuse” was the affair. I can say it’s about time that people in that position be held accountable for their behavior and actions too; after all if the higher risk of the job means they get higher pay, should they not be held to the higher accountability?
One fact about being a mutual company is that a situation like this will not effect the stock price. It may also receive less press than a publically traded stock. This definitly will not effect dividends paid to policyholder/owners-almost nothing does! That being said, his comp. was too high. Greed. Profits that should have been paid out in dividends to policyholder/owners. Are Mass Mutual policyholders/owners getting all of the profit returned to them in the form of dividends that they should? This holds true for the policy holders of publically traded insurers as well. When insurers go public, the policy holders and employees should make a fortune: they don’t. Mass Mutual’s diversification strategy is important(Oppenheimer, Babson, Cornerstone, etc.) but at what point does it pay dividends to the policyholder/ owner’s? I’m sure the executives and employees of those wholly owned subsidiaries are well compensated with stock options. Just seems like dividends should be higher with year after year profits for Mass. Profits are being reinvested, for the benefit of the policyholder/ owners and I wonder if they might might prefer a higher dividend payout one year? Wonder how much stock executives of Mass Mutual received in the wholy owned subsidiaries of the mutual company? Hope the answer is “none”. How do Mass Mutual’s policy holders benefit when the stock of their wholly owned susidiaries goes up in value? Mass Mutual employees have a very good retirement plan, as they should. The special retirement plan described in the WSJ for O’Connell sounded crazy. I am sure there are qualified leaders, already at Mass, that can step in for O’Connell that would be willing to be compensated in a much more “mutual company” kind of way. Bottom line: Mass Mutual just will not tolerate any greed/ethical misstep by an individual. They took swift action and they certainly knew they could rightfuly dismiss O’Connell or they would not have done it. Mass Mutual is very conservative and protects it’s reputation at every turn. O’Connell, evidently, is not.
As I previously stated, O’Connell’s compensation in 2004 at $7.9 million (as reported by the Wall Street Journal today) was more than double what his compensation was in 2003. At the sametime O’Connell’s pay was doubling, he and the board cut the total dividends to be paid to policyowners.
Does that sound like a mutual company being managed in the best interests of its policyowners or a mutual company being managed in the best interests of those in effective control?
Exactly. If he was getting performance pay increases, dividends should have increased the same year. If dividends are lower, then profits must have been lower than expected. If he’s being paid based on increasing profits, something stinks in Denmark. Maybe his pay was based on something else. How is the company making a profit year after year while lowering dividends paid to policyholder/owners?
Who cares abount an affair – thats between him and his wife.
I just wanted to buy an apt at that place on Marco – I was told they all sold out in one day – all the MassMutual insiders got a great deal.
Like the policy owners – I was screwed.
Resolute Partners is a private investment firm headed by Birle. It is his own company. He is an angel investor.
There is nothing suspicious going on at MassMutual. The company moved swiftly and decisively to rid itself of a problem employee who allegedly abused his office, and could have been a potential embarrassment to the company going forward.
There is no further coup or power play in the works. What was done was dome for the good of employees, agents and policyholders.
Birle and Reese are old school. They’ve been with MM for a long time and were brought in by the previosu regime. It is a positive move.
Over the past few days, I received enormous amounts of emails inquiring
into MassMutual’s accounting scandal (shortfalls). Good things come to those who wait.
The outside auditor for 1999 was Price Waterhouse, From 2000 through 2003 it was Deloitte Touche, and for 2004 it was KPMG. I guess that makes it three!
Thank goodness. He deserves to be tarred and feathered. MassMutual tried very hard to find a smoking gun, but came up short. They had Bob and Sue tailed for over year but could find no evidence of an ilicit relationship, so they went after them with the trumped up, scatter gun, smokescrren approach. Consider that just about all of their press releases begin with, we are a very ethical company and we have a zero tolerance policy, and then they contradict themselves repeatly. Take the jet plane. They say that he used it about thirty times for personal use. If they really had a zero tolerance policy, they would have terminated him after the first time. In addtion, I suspect that if every CEO who used the company jet occasionally for personal us were fired that would include many, if not most of the CEOs in America. Let us look at the incident with his son. This appears to have happened 18 months to two years ago, so why was Bob not fired then under the zero tolerance policy. Everybody seem to be reading this as the son gave out insider inforamton (alkin to Martha Stwart), not even close. The Oppenheimer family of mutual funds hires very bright people to study the market and make selections. The son just told the son-in-law one of those selections. I can’t help but wonder how this saw the light of day, because if it was that bad both of these kids would have carried the secret with them to their graves. In addtion, the head of all of Oppenheimer, was Andrew Ruotolo who appears to have been Bob’s best male friend in the company, therefore Bob could have received any tips that he wan’t from Ruotolo, and as far as I can see he could have done so legally. Making a mountain out of a molehill. Then there is the shawdow trading. First, MassMutual dangled this in front of Bob to get him to come over so they have some culpability. Second, it is a very weird game with very weird rules. It just seems to me that Bob simply bent those rules and found loopholes. The biggest charge againist him is that he bought more shares of an IPO with funny money than he could have bought with real money. I am sure that there is no rule (because who would have thoght of it) that specifically forbids that. If he was well liked, Massmutual would have gone “Nice try, but we are not going to allow it, and will reduce it to the amount of shares that you could have bought if you were buying with real money”. I could go on, but you get the idea. I think these are trumped up charges. Do I think that he had an affair with Sue, I do, most employees of the company also did for the last three years, his wife did. When he moved out of the family house he moved into a condo owned by Sue. He also gave Sue lots of power (which she abused) and money. However, Bob and Sue are not the type that you will find going to a notell/motel, find in the back seat of a car or engaging in public displays of affections.
Bob did declare war on employees over forty-five and on employees with more than five years of service with the company (this did not include Sue or Ann). Age discrimation in corporate America is widespread (Check out the cover story of the May issue of Fortune magazine, Fired at Fifty), but Bob, Sue and Ann did it with a passion. These were very bad people. They say that you could fit Bob’s fan club into a phone booth, and that is saying something because he did give a lot of people the biggest break of their lives, and they still ended up hating him. Let us look at Sue and Ann. Sue had thirty-four years of service with the company (starting when she was 17)and Ann also had many, many years of service and they both broke through the glass ceiling. MassMutual (like many insurance companies) has about 70% to 80% female employees so you would think that there would have been an uproar among these female employees. There was none, because females are proably better at recognizing a couple of witches than males are. There is some poetic justice in these trumped up charges, because that is exactly how Massmutual got rid of so many of their older employees. The new leaders may not be saints, but they have to be better than Bob’s posse.
And are you also saying that the company’s publicly held mutual funds do not have to comply with the U.S. generally accepted accounting principles?
It is worth stopping to reflect that you CANNOT believe everything you read. You also CANNOT assume whole-heartedly that the board acts only in the best interests of the company. A board is inherently a collection of differing personalities and conflicting egos, and as such, defines it’s own agenda, sometimes, and sadly, in regard to personal animosities and jealousies.
For instance, regarding the alleged abuse of the company’s planes.
Does anyone realize that after Sept 11th, the board, on their own initiative, passed a resolution FORBIDDING Bob O’Connell from travelling on commercial aviation again UNTIL he RETIRED, even for purposes of PLEASURE. The flip side was, that he was required to pay a fee to the firm out of pocket EACH TIME he used the plane for non-business use. He was also required to pay a fee for EACH ADDITIONAL PASSENGER that accompanied him in a non-business capacity. These fees were competitive with commerical rates and varied depending on the distance travelled. NO JOKE, this can all be proven and is recorded in writing and SIGNED by the new Chariman of the Board Birle HIMSELF.
I have instances such as this to refute each and every accusation the board makes against Bob O’Connell, which I will reveal if anyone really cares….which i suspect you don’t because everyone likes to see the big dog torn down all the time (which is why trashy celebs gone bad mags fill the news stands). Last time I checked, being a mean person was not a capital offense, and the truth is that the board wanted to fire him for one reason but couldn’t prove it (affair), so they spent a year coming up with a bunch of little ones (no matter how artificial or even how complicit the board was in them) to create a basis for moving him out. They have consistently sought to try him in the media and embarrass him so he’ll give up his fight. Just think about it! How easy is it to accuse someone of abusing the priveleges of a private jet (since everyone is jealous of these people, just like we all secretly are of celebrities) and forget to mention the board themselves REQUIRED him to use it the way he did. The public uproar would be and IS furious and the truthful defence can barely be heard above the din!
I believe Bob has made many mistakes and errors of judgement but he certainly does not deserve this embarrasment as his legacy and he certainly is NOT A CRIMINAL.
Oh, and one more thing re: use of the company planes. May be interesting to know that when the new CEO Stuart Reese was renegotiating his contract with Massmutual two years ago, one of the sticking points was that he was requiring increased personal usage of the company’s planes and helicopter. Hmmmmm…..i guess if you fired all the CEO’s in America who use corporate jets for personal travel you wouldn’t have many CEO’s left!
The other side of the argument also goes that a CEO who spends less time driving in traffic to the airport, spending two hours waiting for his flight and sitting cramped and tired in a little seat, then spending time at baggage claim waiting for his lost bags and waiting in a cab-line, cannot possibly devote as much time to company business since his total travelling time is invariably much longer. By that rationale, companies benefit from decreasing the opportunity costs of an executives time. If you think CEO’s sit on those private jets and drink margaritas while watching football you are sadly mistaken. Flights are taken up with going through the inbox, reading financial data, and making business phone calls. Might sound funny, but it’s the truth.
I agree with much of what you are saying, however I don’t have any problem with getting rid of a CEO because he is a awful person and also a potentially dangerous one. In addtion, he used the same tactics to get rid of employees that he simply did not like so many times, that there is a great deal of poetic justice here.
Not only is this not in the same ball-park as Enron, it is not in the same solar system. It is a very good thing that Massmutual is not presently a stock company, or the damage would have been enormous.
ceo’s would better serve their employer by spending more time on the ground and less in the air. maybe they have not heard of phones??
the x-ceo created/allowed an environment where the mediocre rule. for that he should have been relieved. isn’t strange how executives need to cover thier asses and the truth be damned. for this they ALL should be fired.
Let me be clear. I don’t have a problem with the CEO being moved out. I simply don’t believe he deserves to have his name tarnished the way it has in the media. It’s become a circus and it does not seem fair. Totalitarian behavior definitely creates a crisis of leadership and corporate cultures are set from the top and percolate to every nook of an organization. I do caution, however, that you may be hard pressed to find a single CEO who does not remove those who are disloyal to him. It is ALSO hard to lead effectively if others are seeking to undercut your authority. While encouraging a wide variety of opinions is key to ensuring the long-term sustainability of a company’s business model and pace of innovation, crisis would quickly ensue were that variety of views to slide into internal bickering and power struggles.
Let’s also not forget that if greed were O’Connell’s only motivation, he VERY easily could have taken the company public. A company like MassMutual would have been one of the most highly coveted IPO’s in recent memory (except possibly google) and Bob was often courted by greedy investment bankers. CEO’s of companies that size that go public get millions of shares!!!! Very strong motivation indeed especially when the financial condition is extremely sturdy and the shares could almost be guaranteed to go up in the years to come. What he would have made in shares of an IPO and subsequent options would have DWARFED anything he made in the “shadow” account; or didn’t make for that matter since the board refuses to honor the obligation (which they created and supervised, but that is a story for another time).
O’Connell was actually brought in by the board because it was a time when many insurance firms were demutualizing and Bob had worked for both New York Life (mutual company) and AIG (stock company). Therefore, he was supposed to have a unique understanding of the differences, costs and benefits of each structure. In the beginning he believed very strongly that he would take the company public, but after learning more about the business and the firms competitive positioning within the industry, he decided to be kept mutual would be best. That would avoid a nasty takeover where thousands of sprinfield jobs would have been lost as inefficiencies and redundancies were eliminated. No matter what you may hear, O’Connell took very seriously his responsibility to the community and the average worker and this is evidenced by his extensive charity works and donations within the community. He was a fervent supporter of everything springfield and that is all a matter of record.
And regarding Bob’s alleged firing of older workers when he got to Massmutual; what those writers fail to realize is that when new leadership takes over a firm he seeks to create a new corporate culture and foster new and innovative ideas. In a town like Springfield and a company like Massmutual, many people spend their entire lives working for the same firm and never have any experience outside that culture and business model. To clear out a lot of the old dead wood when he arrived, O’Connell offered one of the MOST GENEROUS retirement packages that exists. In fact, older employees that O’Connell wished to stay (begged to stay practically) demurred and took the package because it WAS NEVER GOING TO GET ANY BETTER THAN THAT. This was part of a coherent strategy to thin the ranks of stagnant middle management and instill the company with new, young talent and ideas. For the first several years, the whole plan worked brilliantly and the company vaulted into the Fortune 100 for the first time ever and became the BIGGEST company in the state of Massachusettes, creating jobs and opportunites for countless people along the way. It was only in the last couple years that the CEO’s ego got in the way of his better judgement and he surrounded himself with unqualified but loyal sycophants like Alfano, Lomelie, and Murphy (or so he thought!). That was his true error, but it doesn’t change the success he had while there and certainly doesn’t warrant the sort of attacks on his legacy now making headlines in rags like the Boston Herald everyday.
New leadership at MassMutual is probably a good thing, but let’s not automatically absolve those who were complicit (Birle – and the CT Mutual faction of the baord -, Winter, Reese, and Murphy especially) and now seek to hide behind the cloak of good governance, internal oversight, and speedy action to correct “alleged” abuses. Do you think it’s a coincidence that ALL of the primary co-conspirators in the CEO’s overthrow are NOW appointed members of the CEO’s new “office of the CEO”. Brutus and Cassius would be proud. Perhaps the top echelons need an even more thorough cleaning out before the company can finally put this tragic experience behind it and the policyholders can again take center stage where they belong.
yes, mile high, as i make comment in the chat i just posted. surrounding oneself with those that only tell you what you want to hear is a MAJOR problem among top executives, and you’re right, the best ones are the leaders who are confident enough in their own ability to admit what they don’t know and surround themselves with those who are capable and promising. For that he SHOULD have been fired, but NOT LIKE THIS!!!
experience tells me ceo’s are pretty much shake and bake alike. what the x-ceo brought from aig was bad accounting which persits today. the new guy is no cure for that problem(i honestly believe he does not have a clue how bad it is). it usually takes an outside force (quantum leap) to radically change anything. i think the time is here for the attorneys general to be that force and may god have mercy on mothermutual.
The money here is chump change. There was no bad accounting, no two sets of books, no embezzlement. He bent rules and found loopholes, but did not steal. No smoking gun will be found. Therein lies the problem and the reason that Massmutual used the scattergun approach to get rid of him. Regarding the trumped up charges, I think you have to come up with reasons. You can’t just say, the guy is nasty, off with his head, just like when he got rid of people, he had to give reasons,
Massmutual proposed it would Have Paid Class Members “Zero” (0), Two Class Reps $350,000, and Class Counsel $5 Million Cash, $3 Million in Insurance, and $250,000 Annually for Life
dear brinks some people never never have the opportunity to be fired what a shame otherwise you could learned YOUR EMPLOYER DOES NOT HAVE TO GIVE YOU A REASON TO FIRE YOU. legally speaking they are better off if they do not so they will not need to defend their position.
Republican bigwig Marc Racicot helped orchestrate the downfall of chairman and CEO Robert O’Connell.
Racicot, former governor of Montana and chairman of last year’s Bush-Cheney campaign, had first arranged for O’Connell to be investigated by the law firm of Bracewell & Giuliani.
Racicot happens to be a partner there. And so, since March, is former New York mayor Rudy Giuliani.
I have worked with MM in the past and have found it to be a steady, focused company delivering solid results managed by a highly competant,ethical leadership team. When Bob O’Connell took over something seemed to change. Truth is always found on both sides but something about the core integrity of MM seems to have been lost. It is a shame to watch the current spectable unfold. MM current leadership, assuming more truth on their side, ought to just come clean with all parties and end this PR fiaso.
Robert J. O’Connell tried unsuccessfully in April to fire the head of the company’s Oppenheimer funds unit after an O’Connell confidant at Oppenheimer said he was harassed for raising questions about the mutual funds’ accounting and compliance procedures…
Brinks, who are you replying to? was it me? i don’t think anyone embezzled money. What i said was that Murphy used some aggressive (to say the least) accounting policies at Oppenheimer to prop up flagging results. No embezzlement to personal accounts occurred (at least not that i’m aware). I believe the SEC should take a very close look at the oppy books. Especially those divisions reporting direct to Murphy.
This is true. For over a year before this whole mess, Robert O’Connell was trying to put a certain division of Oppenheimer under Andrew Ruotolo’s supervision because he suspected dodgy accounting practices by Murphy and his cohort. Murphy stonewalled and prevented the transfer, attacking ruotolo on all fronts as well, which was one reason O’Connell was forced to bring Ruotolo to Massmutual as an advisor to the Chairman and CEO. Ruotolo knows where all the bodies are buried in Murphy’s domain at Oppenheimer which was why Murphy had to move quickly to remove him….If the SEC and AG are competent in the least, they will pour through the Oppenheimer books immediately. I suspect there has been some late night paper shredding going on for some time now…
Here we go, once again AIN’T NO MISSING MONEY. Bob does not have a hundred million dollars stashed away in a Swiss bank account. If he did he would not have gone begging to the board for a lousy ten million yesterday. His butt buddy, Andrew also does not have a Swiss bank account. His girlfriend Sue and her butt buddy, Ann also do not have Swiss bank accounts. The new regime does not have Swiss bank accounts. AIN’T no missing money. Is this about money? Well, yes, but not that way. Money comes into the picture in terms of salaries, bonuses, and raises. It previously came into the picture in terms of jet fuel, nepotism and padded expense accounts and that sort of thing. Chump change. Nobody will be charged with embezzlement, nobody will go to prison for embezzlement because there was no embezzlement. MassMutual will take a financial hit in terms that people might not be inclined to buy an insurance policy from them right now. Folks might also invest their money with another family of mutual funds. This will blow over. MassMutual is a great company that had a horible CEO. If MassMutual was a stock company and I was a stockholder I would be totally ripped because I would have lost a bundle in the last month, but MassMutual is not a stock company. Speaking of which, if MassMutual was a stock company this whole affair would have unfolded in an entirely different way. 80% of my net worth is with MassMutual, mostly with Oppenheimer but also my 401K. Shortly, I start collecting my retirement pension from MassMutual. I also have three insurance policies with MassMutual and I have zero worries, and I am a worrying kind of guy. I also have a confession, as I look at my desk there are a couple of pens and a couple of pads of post-it notes that are the property of MassMutual. So maybe I am guilty of embezzlement as well. I do find it curious that we have not heard a squeak from Sue, Ann or Andrew. I suspect that they were given hush money. Oh yes, Sue piped up to say that she did not or was not having an affair with Bob, she lied.
so embezzling is a crime but co-mingling accounts is not a crime?, wrong and inappropriate accounting is not a crime?
the sec is (opps)should look into these practices at all levels.
My concern is that a lot of people are getting the impression that embezzelment and missing funds is what happened, rather than creative accounting to make the botom line look better in order to get bigger raises and bonuses. Big, big difference. I think that a lot of people are also misreading what Bob’s son did as giving out insider trading information (akin to Martha Stewart) rather than giving out an investment tip. There are misdemeanors and there are felonies and there seems to be a lot of confusion between the two happening here. If you got busted for the use of steriods, would you like to be charged for using crack? No Enron here.
Re: your creative accounting to make the botom line look better in order to get bigger raises and bonuses, do you know that statutory accounting hide gains/losses in surpluse account, not income statement? When bonuses are based on income statement without considering hidden losses in surplus account, that’s same as your “accounting to make the botton line look better in order to get bigger raises and bonuses.”
If you cannot face reality, don’t read articles. JUST PRAY!
Reality? The reality is that there is no evidence of creative accounting. The reality is that I certainly don’t approve of creative accounting. The reality is, that under the law, creative accounting is usually considered a lesser offense than embezzlement. The reality is, I am not at all worried about the solvency of MassMutual, are you?
You sound very ignorant on issues, and stubbern. You did not provide any evidence to support your pure argument that there is no embezzlement nor creative accounting. Nor your sound you posssess sophisticated accounting knowledge.
Why don’t you save your energy until the investigation/examinations are over.
That’s why currently there are several investigation/examination are going on.
Isn’t it time to stop being an apologist for a vile human being like Bob O?
His abuse of power and privilege is as well known as his cruelty. Since you seem to represent him, did he ever tell you the one, going back about 15 years ago, when he fired a subordinate on Christmas Eve for the offense of padding his expense report by $25?
As for your screed on post 9/11 air travel, dollars to doughnuts he was abusing the corporate jet access well before then.
Your “all the other CEOs do it” excuse is offensive to the countless number of C level execs who do not abuse their power.
It isn’t me who said “all the other CEOs do it”. But I think s/he made a point.
I do not take Bob’s side. But I do not buy the argument that Bob was the only evil. Obviously current executives did not confront the evil, Bob, and received fat compensation/benefits.
Board members blame Bob using private jet, but the board member personally takes profits in investigating Bob.
James Birley’s ethics speech..Stu Reese’ open door policy… I say bunch of baloney…
There is no reason to believe the CEO would enjoy sudden riches if he were to lead the charge for a demutualization of the company.
He might not get much stock. In the case of mutual insurance companies, the policy-holders are the owners who are offered the stock in a demutualization. His proportional ownership through his insurance policies might entitle him to very littel stock.
However, he and his fellow executives are positioned to create some generous stock option packages that vest over time.
Still, it’s hard to beat a personal stock market account where one can pretend to receive huge allocations of hot IPOs and then pocket the mythical profits as real cash. That beats a real insurance company IPO any day.
Say this is a lot more fun than who got extra air miles and a little extra cushion pushing ala massmutual.
Keep up the good work, those little rascals would like to make you think its about something sexy but its not…follow the money!!!!
I was reviewing the GAAP RCGs for derivative open positions as of 4/30/05. It appears as though there were huge gains recognized in April, as the balance at 3/31/05 was $215 million loss and the balance at 4/30/05 was $6 million loss, a difference of $209 million gain
Part of the mismatch was due to a misinterpretation of ALM results during the quarter; and adjustment for equity-related assets was double counted (i.e. incorrectly applied on the asset side, since the liabilities already incorporated the adjustment).
The variance between our values and the broker mark values for swaptions indicates an misstatement of the Derivative Statement Values by approximately $1.2m.
the problem was bernie told his “people” he wanted a higher standard set every quarter. So shall it be written so shall it be done! to do the impossible you got to look the other way, the same goes for mom mutual. numerous external auditors over a short time period indicates somebody is “shopping”. also means their internal structure suffers and decays and within a given period of time the agency hounds smell the rotting fleash and pursue it into extinction.
If you can stand yet another episode in the continuing saga of former Gov. Marc Racicot, here goes. Apparently he sits on the board of MassMutual, an insurance giant which recently fired its CEO, Robert J. O’Connell.
Mr. O’Connell’s dismissal, for â€Åâ€Ŕalleged abuse of power and self-dealing,†was based on a report and a follow-up prepared by a private investigator and Bracewell & Giuliani, where Mr. Racicot is a partner. Mr. Racicot reportedly headed up the board’s inquiry and selected the firm.
Massmutual and its funds manage complex derivatives. The head of accounting never heard of “covered call”. Meaning, the head of accounting never read Statutory accounting no. 86.
Why is it I do not see Jessie Jackson or al Shark down in New Orleans stopping their people for stealing. Jessie and Al you must be so proud of them.
I feel sorry for Bill Corsby who is trying to help his people. Unlike you Jessie and Al – You want to keep them down and I must say you are doing a great job at it.
dear mary the moran,
pls read the book “black like me” published about tha timeyou were in grade school. if this is too contemporary read “people of the abyss” by jack london.
after you do then to to any downtown to any city usa after the suite and tie crowd has vacated and sit around and see what you see. go back to your house and tell your kids about your experience. sometimes the messager is not to our liking but the message must be preserved.
Jim Birle is a class act. He is the guy you’d want in there, if there was a problem. He is brilliant,and a great guy. His resume is amazing, but he is a modest man. He is on that board because his reputation is beyoubd reproach. If you work there,be thankful he is there to help. You need men like him that have integrity, when anything questionable happens. Just my opinion,Sincerly,Doug
Here it is 2007, 2 years later, and MassMutual has managed, by constantly changing the necessary documentation, never receiving necessary documentation, and just not responding to calls and letters have spun out a case for ten months while they investigate that Social Security has already been approved for the disability that they are contesting as nonexistent.
So a policy with a 90 day waiting period stretches to 10 months while savings are spent, credit is exhausted, the home is mortgaged to the hilt and it looks as if selling the car is next.
We paid 10 years of premiums so we could either go to the poorhouse or else take MassMutual’s lowball offer when it comes out of desperation?
Wonder if the CEO would loan me a couple of bucks for groceries?
Hmmm. An AIG connection, huh? AIG – The House of Cards . . .
Yes and Andrew Ruotolo was suspended as the COO of Oppenheimer (MML’s subsidiary) today. Isn’t he AIG too?
oppenheimer is not a subsidary of NML. Get your facts sraight
Dan, unless you know something a lot of us don’t, Oppenheimer Funds is wholely owned by MassMutual. I think that makes it a subsidiary.
Eyes shot, thought is said NML’s (northwestern mutual life)
sorry
Boeing all over again.
This has nothing to do with the issues like AIG. This guy was abusing his power. To other execs were let go also. This guy was bad
Actually, Oppenheimer is owned by MM/MML
The CEO at Oppeheimer’s Transfer Agent – a crony of O’Connell’s from AIG – was also let go. Good truly has triumphed over evil.
My gut feeling is that the leaders at the helm of the ship have no clue as to the depth of the problems O’Connell has wrought on MassMutual. In particular, I believe that the financial results reported during O’Connell’s years will have to be revised significantly downward as a result of questionable accounting practices he encouraged.
I recognize my view is at odds with the fact that MassMutual has said O’Connell’s departure does “not affect the company’s financial strength or its operations.” I simply believe they do not have a handle on the depth of the financial rot.
If it is verified and publicized that O’Connell and/or Ruotolo and/or others were bilking money from mutual funds in the MassMutual stable, the loss of financial assets entrusted to MassMutual and its subsidiaries would hit the company like a giant financial tsunami. The result would be an immediate, critical demand for liquidity. With such repercussions, it is not surprising that MassMutual officials have circled the wagons and hung out a flag suggesting sexual misconduct as the cause of last week’s executive evisceration.
What areas of accounting do you think is rotten?
Are you just guessing, or do you know something?
I am also a former employee and would say that Ruotolo, who you refer to as evil, did get the organization to focus and resolve some key issues….only time will tell if good triumphed over evil…bottom line is they still continue have many issues which negatively affect the shareholder of the funds. What has Murphy done?????
I discovered that on the day O’Connell was fired by MassMutual the Vice Chairman and Chief Operating Officer of Oppenheimer Funds, Andrew Ruotolo, was led from his Oppenheimer office “in handcuffs”.
The Oppenheimer Funds are a subsidiary of MassMutual and Ruotolo was listed in the 2004 MassMutual Annual Report as a Senior Advisor to Chairman O’Connell.
The word is that O’Connell brought Ruotolo over from AIG along with the other members of his gang. Ruotolo was then injected by O’Connell into the Oppenheimer Funds like the bubonic plague. Longtime officers and employees were apparently more than somewhat gleeful, therefore, as Ruotolo made his “Perp Walk” in shackles as the flash bulbs popped and the cameras rolled.
The fall from grace of AIG and its chairman Maurice Greenberg (O’Connell’s mentor) has been well chronicled in the press. The lack of ethics and integrity that characterized AIG obviously found fertile ground at MassMutual.
Does anyone know who arrested Ruotolo and/or the reason he was arrested. It has been rumored that O’Connell was bilking money from mutual funds – Ruotolo’s arrest fits nicely into that rumor.
I heard someone reported accounting errors to Babson Capital and fired this month.
Sources with knowledge of the situation have already denied the pair had been involved. Investigations by the company itself had also found no evidence of a relationship.
http://business.bostonherald.com/businessNews/view.bg?articleid=88740
MassMutual Board Fired CEO
On Finding ‘Willful Malfeasance’
By JAMES BANDLER and JOANN S. LUBLIN
Staff Reporters of THE WALL STREET JOURNAL
June 10, 2005; Page A1
The abrupt notice of termination given last week to the head of MassMutual Financial Group, one of the nation’s largest financial companies, came after a board
investigation concluded he had engaged in an improper pattern of self-dealing and abuse of power, according to people familiar with the probe.
The probe made several allegations against former Chairman and Chief Executive Robert J. O’Connell, among them that he inflated the value of a special
retirement account by tens of millions of dollars, bought a company-owned condominium at a below-market price and interfered in efforts to discipline his son and
son-in-law, who worked at MassMutual, said people familiar with the probe.
Notice of Mr. O’Connell’s termination rocked the Springfield, Mass., company, which has 27,000 employees and more than $350 billion in assets under
management. The 154-year-old company provides insurance, annuities and other financial products through Massachusetts Mutual Life Insurance Co. and a
number of affiliates, which include such companies as Oppenheimer Funds Inc., Baring Asset Management and Babson Capital Management. As a mutual insurer,
the company is owned by its policyholders.
In announcing its notice of termination to Mr. O’Connell, who had been CEO nearly seven years, the company said only that its action was related to his
“conduct.” Several other executives also have been asked to leave in recent days, said people familiar with the probe.
A spokesman for Mr. O’Connell declined to comment. One person familiar with the matter said Mr. O’Connell disputes the board findings and argues that he did
nothing wrong. This person attributed Mr. O’Connell’s firing to a power grab by a faction of the company that opposed Mr. O’Connell’s leadership, and which
wants to make MassMutual a publicly held company — a step he opposed.
“Not only did they decide to deprive him of his position, but they decided to deprive him of the fruits of seven years of very successful effort,” this person said.
In a statement, new Chairman James R. Birle, a director since 1992, declined to comment on the findings of the probe, but said the board “has a zero-tolerance
policy for any acts … that violate the letter and the spirit of the company’s code of ethics. When we learned of possible wrongdoings and misdeeds by our Chief
Executive Officer, we began a thorough and fair investigation” and later gave Mr. O’Connell a notice of intent to “terminate his employment, for cause,” he said.
MassMutual has said that the matters for which Mr. O’Connell was terminated will not affect its financial strength or its future operations. Stuart H. Reese, formerly
executive vice president and chief investment officer, was named to succeed Mr. O’Connell as CEO.
According to people familiar with the probe, MassMutual earlier this week gave Massachusetts insurance regulators a draft of the 59-page report on Mr.
O’Connell prepared by outside advisers for the board. The company also has alerted regulators in three other states.
The company’s probe was triggered in part by a call to a company director from Mr. O’Connell’s then-wife, said people familiar with the probe.
One accusation against Mr. O’Connell involves a “shadow” supplemental retirement account, which was akin to a 401(k) plan but involved only hypothetical
assets, these people said. Such accounts are commonly granted to top executives.
Over time, such an account’s value increases or decreases based on hypothetical trades made by the executive. No actual investments or trades are made, but the
account represents a future company obligation to the executive. Upon retirement, the executive gets a cash payout equal to the value of the account.
The board probe found that Mr. O’Connell was supposed to be buying and selling only mutual funds and selected stocks in the account, said people familiar with
the probe. Instead, the probe found he improperly credited to the account purchases of big chunks of hot initial public offerings at their original offering prices,
these people said.
In at least one case, the probe found he pretended to buy more shares of an IPO than any real investor was allocated, according to people familiar with the probe.
He also allegedly credited his account with phantom trades of securities after the close of markets, these people said.
The probe found that Mr. O’Connell’s hypothetical account swelled to $30.6 million at the end of March from $4.1 million in late 1998, according to people
familiar with the probe. That’s a 37% average annual gain. By comparison, the Dow Jones Industrial Average gained an annual average of 2.2% over that period.
The board was unaware of the unusual trading and the size of Mr. O’Connell’s retirement fund until recently, said people familiar with the probe. He wasn’t
expected to receive the amount in the account until at least 2008, when he will turn 65, these people said.
One person familiar with the matter said Mr. O’Connell never received a penny from the supplemental retirement account. This person added that the board
approved two amendments allowing more frequent transactions. Mr. O’Connell instigated new restrictions that were imposed on the account last year, this person
said.
This person also said Mr. O’Connell is likely to argue that he believed the phantom IPO transactions were allowed because they were publicly traded securities.
“This was all open and obvious and carried on the books of the company,” this person said.
Mr. O’Connell was a senior executive at American International Group Inc., the nation’s largest publicly traded insurer, when he was wooed to MassMutual in late
1998. He became president and CEO in early January 1999. His 2004 salary and bonus totaled $7.9 million, according to data compiled by the Insurance Forum,
an industry publication.
According to a person familiar with the probe, the board began investigating Mr. O’Connell in early 2004 when his then-wife, Claire, called a director accusing her
husband of an extramarital affair with another high-ranking executive, Susan Alfano.
Said Gerald Nissenbaum, Mrs. O’Connell’s divorce attorney, “It’s not in her economic interests to see him fired. And she would not have taken steps to get him
fired.”
After her call, the board hired an outside law firm to investigate the matter, and no proof of an affair was found, said one person familiar with the probe.
Ms. Alfano stepped down as executive vice president for enterprise systems and services last week. In a statement issued through her attorney, she said, “It is
common in both public and private enterprises for new leaders to be given the courtesy of working with their own team. Any innuendo that my departure was
motivated by an inappropriate personal relationship is malicious and unfounded and harkens back to a 1950s mentality which, frankly, all professional women had
hoped was history.”
After the initial investigation ended, several directors began making their own inquiries into Mr. O’Connell’s conduct, and in February 2005 the board hired a
different law firm, Cadwalader, Wickersham & Taft LLP, to lead a deeper probe, said people familiar with the probe.
Last week, the board met at a hotel near the Hartford, Conn., airport and confronted Mr. O’Connell with a three-page termination notice, these people said.
Among other things, the notice accused him of “willful malfeasance” for his improper use of the supplemental retirement account, these people said.
Another issue cited by the board was the condo deal, said people familiar with the probe. A unit of MassMutual, Cornerstone Real Estate Advisers, has been
developing an exclusive complex in Marco Island, Fla., called Madeira Condominiums. In 2002, Mr. O’Connell and his wife paid the company $4.95 million for a
condo, which remains under construction, according to people familiar with the probe.
After Mr. O’Connell and his wife began divorce proceedings last year, he told Cornerstone he wanted to buy a smaller unit for his own use, these people said. The
unit had been tentatively sold, but the sale had fallen through, these people said. Since the initial sale, Cornerstone estimated the value of the smaller unit had risen
35%, and was planning to keep the unit off the market until the building’s completion, these people said.
The board probe accuses Mr. O’Connell of pressuring Alan M. Connor, Cornerstone’s long-time CEO, to sell him the unit at its original $1.87 million selling price,
said people familiar with the probe. Mr. Connor balked, telling Mr. O’Connell it wasn’t for sale, and at a later meeting told him the transaction was a “bad idea,”
these people said.
Mr. O’Connell said Cornerstone needed to “agree to sell the unit” right away, said one of the people familiar with the probe. As a compromise, Mr. O’Connell
offered to pay 6% more than the original offering price, and eventually ended up agreeing to pay more than $1.88 million, this person said. That was the lower
value of two outside appraisals, this person said.
The board’s investigators concluded this was a “self-dealing transaction,” because Mr. O’Connell never presented it to fellow board members, according to a
person familiar with the probe.
In addition, directors were concerned to learn that, after the contentious condo transaction, Mr. O’Connell allegedly slashed Mr. Connor’s proposed 2004 bonus
from $800,000 to $700,000, said people familiar with the probe.
One person familiar with the matter said the question of how to proceed on the real-estate deal was handled by the MassMutual general counsel’s office, and the
price paid by Mr. O’Connell was determined to be a fair market price by an outside appraiser chosen by Cornerstone.
This person said the decision to cut Mr. Connor’s bonus was based on the recommendation of one of his superiors, not Mr. O’Connell. “Any link between the two
is pure fiction,” this person said.
Mr. Connor couldn’t be reached for comment.
Initially, Mr. O’Connell was allowed to make hypothetical trades in his retirement account four times a year, in a dozen mutual funds, said people familiar with the
probe. In early 2000, Mr. O’Connell got permission from the board to trade as well in 15 listed securities, these people said.
These people said Mr. O’Connell went beyond the allowed trading, sometimes dabbling in hypothetical shares of hot IPOs. Such shares often are coveted, and
are doled out sparingly by underwriters, because they can quickly soar in value.
The board report alleges that when JetBlue Airways Corp. went public in 2002, for example, Mr. O’Connell allocated himself 234,263 phantom shares at the IPO
price of $27 a share, according to people familiar with the probe. The stock opened at $37.52 on April 12, 2002, and closed at $45 that same day. As result, the
MassMutual CEO made a paper gain of about $4.2 million in that single day, according to these people. These people said no actual investors received as many
shares as Mr. O’Connell’s phantom allocation.
JetBlue’s IPO was oversubscribed 20-fold, a person familiar with the deal said at the time, and underwriters increased the number of shares being floated to 5.87
million shares, as well as raising the offering price. The stock’s 67% first-day gain was the largest in 2002 at that point.
MassMutual changed corporate guidelines in 2004 to make it somewhat harder for executives to enjoy big gains from shadow trades in IPO shares. A person
familiar with the probe said the change was made by human-resources officials who were alarmed by the growth in Mr. O’Connell’s account.
Mr. O’Connell also was accused in his termination letter of interfering with an internal investigation and disciplinary action against two relatives, said people familiar
with the probe. Mr. O’Connell’s son, Jared, worked as a low-level analyst at MassMutual’s Oppenheimer unit and his son-in-law, Rex Hampton, worked for
MassMutual, these people said.
Jared O’Connell could not be reached for comment. Mr. Hampton did not return phone calls seeking comment.
People familiar with the probe said a compliance officer at the company uncovered evidence that Jared O’Connell was recommending stocks to Mr. Hampton.
The compliance officer recommended that a letter of censure be placed in Jared O’Connell’s personnel file, because he had revealed proprietary information
outside Oppenheimer, these people said.
Instead, the letter ended up being put in the firm’s less accessible compliance file, people familiar with the probe said. No letter could be found for Mr. Hampton,
these people said.
A person familiar with the matter said Mr. O’Connell had no role whatsoever in the handling of any letters.
Under Mr. O’Connell’s 1998 employment agreement, the board was obligated to give him 15 days notice if he was fired for cause. He is allowed to “cure” the
reasons for his dismissal during that period, which ends June 23. If he fails to correct those issues, he remains ultimately entitled to arbitration.
The board’s termination notice “is subject to contractual rights that I intend to exercise,” Mr. O’Connell said in a statement last week.
I have info/doc.
contact:
risk555@hotmail.com
Well as someone who’s still here I can say this. HE was having an affair with Sue Alfano. Unless a CEO always walks side by side with his VP’s holding hands and such. If they make us a public company we will go the way Phoenix Mutual went and be dead in no time.
citibank gives up cash for enron debacle.
next will it be mothermutual?
citibank turned a blind eye to enron accounting. it seems massmutual management is guilty of shenanigans.
anybody know/heard of accounting games??
Darla you are absolutely wrong. As a public company you would get to enjoy the fruits of your labors by being a shareholder. The employees of Microsoft, WalMart, Home Depot, Prudential and numerous other public companies have been able to buy stock in their companies at substantial discounts and they have also been awarded stock options. As a result, millions of people have amassed sizeable nest eggs and many have accumulated fortunes. Very few people who work for mutual companies ever make enough to build their net worth.
Whoever planted the seed that you, as an officer or as an employee, were better off by MassMutual not going public was doing you a great financial disservice. I seem to recall O’Connell saying the mutual form was best – it sure was for him because he was paid $7.9 million in 2004, which was more than double his compensation in 2003. Did he double your pay in 2004?
darla you live the great american dream of the 50’s. today compare your thinking with the reality of being an enron stockholder period …not a dream but a nightmare.
Hi Tillie – to be honest he didn’t double my pay in 2004 but likely no one else in that job would have either. I can tell you that the affair was going on for quite some time and I will say that I believe it’s the AIG investigation that is the main reason why he was let go and that the “excuse” was the affair. I can say it’s about time that people in that position be held accountable for their behavior and actions too; after all if the higher risk of the job means they get higher pay, should they not be held to the higher accountability?
Hi Felix – I’m not sure I’m following you can you elaborate a bit?
One fact about being a mutual company is that a situation like this will not effect the stock price. It may also receive less press than a publically traded stock. This definitly will not effect dividends paid to policyholder/owners-almost nothing does! That being said, his comp. was too high. Greed. Profits that should have been paid out in dividends to policyholder/owners. Are Mass Mutual policyholders/owners getting all of the profit returned to them in the form of dividends that they should? This holds true for the policy holders of publically traded insurers as well. When insurers go public, the policy holders and employees should make a fortune: they don’t. Mass Mutual’s diversification strategy is important(Oppenheimer, Babson, Cornerstone, etc.) but at what point does it pay dividends to the policyholder/ owner’s? I’m sure the executives and employees of those wholly owned subsidiaries are well compensated with stock options. Just seems like dividends should be higher with year after year profits for Mass. Profits are being reinvested, for the benefit of the policyholder/ owners and I wonder if they might might prefer a higher dividend payout one year? Wonder how much stock executives of Mass Mutual received in the wholy owned subsidiaries of the mutual company? Hope the answer is “none”. How do Mass Mutual’s policy holders benefit when the stock of their wholly owned susidiaries goes up in value? Mass Mutual employees have a very good retirement plan, as they should. The special retirement plan described in the WSJ for O’Connell sounded crazy. I am sure there are qualified leaders, already at Mass, that can step in for O’Connell that would be willing to be compensated in a much more “mutual company” kind of way. Bottom line: Mass Mutual just will not tolerate any greed/ethical misstep by an individual. They took swift action and they certainly knew they could rightfuly dismiss O’Connell or they would not have done it. Mass Mutual is very conservative and protects it’s reputation at every turn. O’Connell, evidently, is not.
As I previously stated, O’Connell’s compensation in 2004 at $7.9 million (as reported by the Wall Street Journal today) was more than double what his compensation was in 2003. At the sametime O’Connell’s pay was doubling, he and the board cut the total dividends to be paid to policyowners.
Does that sound like a mutual company being managed in the best interests of its policyowners or a mutual company being managed in the best interests of those in effective control?
Exactly. If he was getting performance pay increases, dividends should have increased the same year. If dividends are lower, then profits must have been lower than expected. If he’s being paid based on increasing profits, something stinks in Denmark. Maybe his pay was based on something else. How is the company making a profit year after year while lowering dividends paid to policyholder/owners?
Does any one knows James Birle’s email address” James birle is board of director member, and nonexecutive ceo of massmutual.
Who cares abount an affair – thats between him and his wife.
I just wanted to buy an apt at that place on Marco – I was told they all sold out in one day – all the MassMutual insiders got a great deal.
Like the policy owners – I was screwed.
MassMutual is NOT part of the FEMA suit. MassMutual does not write property and casualty coverages.
O’Connell was axed because he ws a mean person.
MassMutual is in a much improved position with two long-term MassMutual loyalists in charge.
Does anyone know if MassMutual is a WYO carrier and are they involved in the $2 Billion consipracy suit reported by the Washington Post on June 9?
http://www.femainfo.us/legal_actions_conspiracy_suit.shtml
what are you talking about? I do not follow.
“I just wanted to buy an apt at that place on Marco – I was told they all sold out in one day – all the MassMutual insiders got a great deal.”
jack, if “mean” is a rationale for firing then the “divine right of kings” is a rationale for hiring. so may i ask what high school you went to?
what high school did you graduate from?
then i will tell you why?
Resolute Partners is a private investment firm headed by Birle. It is his own company. He is an angel investor.
There is nothing suspicious going on at MassMutual. The company moved swiftly and decisively to rid itself of a problem employee who allegedly abused his office, and could have been a potential embarrassment to the company going forward.
There is no further coup or power play in the works. What was done was dome for the good of employees, agents and policyholders.
Birle and Reese are old school. They’ve been with MM for a long time and were brought in by the previosu regime. It is a positive move.
nothing goin on? jack, sounds like you are a spokeperson for massmutual. hiding your identity?
when massmutual fired the ceo, it said nothing going on financially, and cheaply implied an affair.
since the firing, there has been a lot more than just an affair.
jack, do not hide. be honest.
James Birle is supposely partner of Resolute Partners, LLC in Florida.
There is Resolute Partners in CT, and the operator never heard of James Birle.
No one knows Resolute Partners in Florida.
Do you want to contact Birle? Why?
Over the past few days, I received enormous amounts of emails inquiring
into MassMutual’s accounting scandal (shortfalls). Good things come to those who wait.
I do not know what high school Birle attended but my father attended Villanova University when he did.
Mr. Bill Glavin,
Are you implicitly admitting that Massmutual’s FUNDS accounting is inaccurate?
Does anyone know that Massmutual has had three different external auditors within the past five years?
The outside auditor for 1999 was Price Waterhouse, From 2000 through 2003 it was Deloitte Touche, and for 2004 it was KPMG. I guess that makes it three!
An accounting director at Massmutual once said; “we know something is wrong with our accounting, but we do not know what’s wrong.”
Thank goodness. He deserves to be tarred and feathered. MassMutual tried very hard to find a smoking gun, but came up short. They had Bob and Sue tailed for over year but could find no evidence of an ilicit relationship, so they went after them with the trumped up, scatter gun, smokescrren approach. Consider that just about all of their press releases begin with, we are a very ethical company and we have a zero tolerance policy, and then they contradict themselves repeatly. Take the jet plane. They say that he used it about thirty times for personal use. If they really had a zero tolerance policy, they would have terminated him after the first time. In addtion, I suspect that if every CEO who used the company jet occasionally for personal us were fired that would include many, if not most of the CEOs in America. Let us look at the incident with his son. This appears to have happened 18 months to two years ago, so why was Bob not fired then under the zero tolerance policy. Everybody seem to be reading this as the son gave out insider inforamton (alkin to Martha Stwart), not even close. The Oppenheimer family of mutual funds hires very bright people to study the market and make selections. The son just told the son-in-law one of those selections. I can’t help but wonder how this saw the light of day, because if it was that bad both of these kids would have carried the secret with them to their graves. In addtion, the head of all of Oppenheimer, was Andrew Ruotolo who appears to have been Bob’s best male friend in the company, therefore Bob could have received any tips that he wan’t from Ruotolo, and as far as I can see he could have done so legally. Making a mountain out of a molehill. Then there is the shawdow trading. First, MassMutual dangled this in front of Bob to get him to come over so they have some culpability. Second, it is a very weird game with very weird rules. It just seems to me that Bob simply bent those rules and found loopholes. The biggest charge againist him is that he bought more shares of an IPO with funny money than he could have bought with real money. I am sure that there is no rule (because who would have thoght of it) that specifically forbids that. If he was well liked, Massmutual would have gone “Nice try, but we are not going to allow it, and will reduce it to the amount of shares that you could have bought if you were buying with real money”. I could go on, but you get the idea. I think these are trumped up charges. Do I think that he had an affair with Sue, I do, most employees of the company also did for the last three years, his wife did. When he moved out of the family house he moved into a condo owned by Sue. He also gave Sue lots of power (which she abused) and money. However, Bob and Sue are not the type that you will find going to a notell/motel, find in the back seat of a car or engaging in public displays of affections.
Bob did declare war on employees over forty-five and on employees with more than five years of service with the company (this did not include Sue or Ann). Age discrimation in corporate America is widespread (Check out the cover story of the May issue of Fortune magazine, Fired at Fifty), but Bob, Sue and Ann did it with a passion. These were very bad people. They say that you could fit Bob’s fan club into a phone booth, and that is saying something because he did give a lot of people the biggest break of their lives, and they still ended up hating him. Let us look at Sue and Ann. Sue had thirty-four years of service with the company (starting when she was 17)and Ann also had many, many years of service and they both broke through the glass ceiling. MassMutual (like many insurance companies) has about 70% to 80% female employees so you would think that there would have been an uproar among these female employees. There was none, because females are proably better at recognizing a couple of witches than males are. There is some poetic justice in these trumped up charges, because that is exactly how Massmutual got rid of so many of their older employees. The new leaders may not be saints, but they have to be better than Bob’s posse.
And are you also saying that the company’s publicly held mutual funds do not have to comply with the U.S. generally accepted accounting principles?
I guess you Massmutual employees have been so used to corruption/incompetency and free benefits. Enron, sounds familiar??
It is worth stopping to reflect that you CANNOT believe everything you read. You also CANNOT assume whole-heartedly that the board acts only in the best interests of the company. A board is inherently a collection of differing personalities and conflicting egos, and as such, defines it’s own agenda, sometimes, and sadly, in regard to personal animosities and jealousies.
For instance, regarding the alleged abuse of the company’s planes.
Does anyone realize that after Sept 11th, the board, on their own initiative, passed a resolution FORBIDDING Bob O’Connell from travelling on commercial aviation again UNTIL he RETIRED, even for purposes of PLEASURE. The flip side was, that he was required to pay a fee to the firm out of pocket EACH TIME he used the plane for non-business use. He was also required to pay a fee for EACH ADDITIONAL PASSENGER that accompanied him in a non-business capacity. These fees were competitive with commerical rates and varied depending on the distance travelled. NO JOKE, this can all be proven and is recorded in writing and SIGNED by the new Chariman of the Board Birle HIMSELF.
I have instances such as this to refute each and every accusation the board makes against Bob O’Connell, which I will reveal if anyone really cares….which i suspect you don’t because everyone likes to see the big dog torn down all the time (which is why trashy celebs gone bad mags fill the news stands). Last time I checked, being a mean person was not a capital offense, and the truth is that the board wanted to fire him for one reason but couldn’t prove it (affair), so they spent a year coming up with a bunch of little ones (no matter how artificial or even how complicit the board was in them) to create a basis for moving him out. They have consistently sought to try him in the media and embarrass him so he’ll give up his fight. Just think about it! How easy is it to accuse someone of abusing the priveleges of a private jet (since everyone is jealous of these people, just like we all secretly are of celebrities) and forget to mention the board themselves REQUIRED him to use it the way he did. The public uproar would be and IS furious and the truthful defence can barely be heard above the din!
I believe Bob has made many mistakes and errors of judgement but he certainly does not deserve this embarrasment as his legacy and he certainly is NOT A CRIMINAL.
Oh, and one more thing re: use of the company planes. May be interesting to know that when the new CEO Stuart Reese was renegotiating his contract with Massmutual two years ago, one of the sticking points was that he was requiring increased personal usage of the company’s planes and helicopter. Hmmmmm…..i guess if you fired all the CEO’s in America who use corporate jets for personal travel you wouldn’t have many CEO’s left!
The other side of the argument also goes that a CEO who spends less time driving in traffic to the airport, spending two hours waiting for his flight and sitting cramped and tired in a little seat, then spending time at baggage claim waiting for his lost bags and waiting in a cab-line, cannot possibly devote as much time to company business since his total travelling time is invariably much longer. By that rationale, companies benefit from decreasing the opportunity costs of an executives time. If you think CEO’s sit on those private jets and drink margaritas while watching football you are sadly mistaken. Flights are taken up with going through the inbox, reading financial data, and making business phone calls. Might sound funny, but it’s the truth.
Oh, please. What a meaningless piece of information.
I agree with much of what you are saying, however I don’t have any problem with getting rid of a CEO because he is a awful person and also a potentially dangerous one. In addtion, he used the same tactics to get rid of employees that he simply did not like so many times, that there is a great deal of poetic justice here.
Not only is this not in the same ball-park as Enron, it is not in the same solar system. It is a very good thing that Massmutual is not presently a stock company, or the damage would have been enormous.
ceo’s would better serve their employer by spending more time on the ground and less in the air. maybe they have not heard of phones??
the x-ceo created/allowed an environment where the mediocre rule. for that he should have been relieved. isn’t strange how executives need to cover thier asses and the truth be damned. for this they ALL should be fired.
Let me be clear. I don’t have a problem with the CEO being moved out. I simply don’t believe he deserves to have his name tarnished the way it has in the media. It’s become a circus and it does not seem fair. Totalitarian behavior definitely creates a crisis of leadership and corporate cultures are set from the top and percolate to every nook of an organization. I do caution, however, that you may be hard pressed to find a single CEO who does not remove those who are disloyal to him. It is ALSO hard to lead effectively if others are seeking to undercut your authority. While encouraging a wide variety of opinions is key to ensuring the long-term sustainability of a company’s business model and pace of innovation, crisis would quickly ensue were that variety of views to slide into internal bickering and power struggles.
Let’s also not forget that if greed were O’Connell’s only motivation, he VERY easily could have taken the company public. A company like MassMutual would have been one of the most highly coveted IPO’s in recent memory (except possibly google) and Bob was often courted by greedy investment bankers. CEO’s of companies that size that go public get millions of shares!!!! Very strong motivation indeed especially when the financial condition is extremely sturdy and the shares could almost be guaranteed to go up in the years to come. What he would have made in shares of an IPO and subsequent options would have DWARFED anything he made in the “shadow” account; or didn’t make for that matter since the board refuses to honor the obligation (which they created and supervised, but that is a story for another time).
O’Connell was actually brought in by the board because it was a time when many insurance firms were demutualizing and Bob had worked for both New York Life (mutual company) and AIG (stock company). Therefore, he was supposed to have a unique understanding of the differences, costs and benefits of each structure. In the beginning he believed very strongly that he would take the company public, but after learning more about the business and the firms competitive positioning within the industry, he decided to be kept mutual would be best. That would avoid a nasty takeover where thousands of sprinfield jobs would have been lost as inefficiencies and redundancies were eliminated. No matter what you may hear, O’Connell took very seriously his responsibility to the community and the average worker and this is evidenced by his extensive charity works and donations within the community. He was a fervent supporter of everything springfield and that is all a matter of record.
And regarding Bob’s alleged firing of older workers when he got to Massmutual; what those writers fail to realize is that when new leadership takes over a firm he seeks to create a new corporate culture and foster new and innovative ideas. In a town like Springfield and a company like Massmutual, many people spend their entire lives working for the same firm and never have any experience outside that culture and business model. To clear out a lot of the old dead wood when he arrived, O’Connell offered one of the MOST GENEROUS retirement packages that exists. In fact, older employees that O’Connell wished to stay (begged to stay practically) demurred and took the package because it WAS NEVER GOING TO GET ANY BETTER THAN THAT. This was part of a coherent strategy to thin the ranks of stagnant middle management and instill the company with new, young talent and ideas. For the first several years, the whole plan worked brilliantly and the company vaulted into the Fortune 100 for the first time ever and became the BIGGEST company in the state of Massachusettes, creating jobs and opportunites for countless people along the way. It was only in the last couple years that the CEO’s ego got in the way of his better judgement and he surrounded himself with unqualified but loyal sycophants like Alfano, Lomelie, and Murphy (or so he thought!). That was his true error, but it doesn’t change the success he had while there and certainly doesn’t warrant the sort of attacks on his legacy now making headlines in rags like the Boston Herald everyday.
New leadership at MassMutual is probably a good thing, but let’s not automatically absolve those who were complicit (Birle – and the CT Mutual faction of the baord -, Winter, Reese, and Murphy especially) and now seek to hide behind the cloak of good governance, internal oversight, and speedy action to correct “alleged” abuses. Do you think it’s a coincidence that ALL of the primary co-conspirators in the CEO’s overthrow are NOW appointed members of the CEO’s new “office of the CEO”. Brutus and Cassius would be proud. Perhaps the top echelons need an even more thorough cleaning out before the company can finally put this tragic experience behind it and the policyholders can again take center stage where they belong.
yes, mile high, as i make comment in the chat i just posted. surrounding oneself with those that only tell you what you want to hear is a MAJOR problem among top executives, and you’re right, the best ones are the leaders who are confident enough in their own ability to admit what they don’t know and surround themselves with those who are capable and promising. For that he SHOULD have been fired, but NOT LIKE THIS!!!
Yes but I DO KNOW
And it will rain so hard from the heavens that you will LOSE your job!
experience tells me ceo’s are pretty much shake and bake alike. what the x-ceo brought from aig was bad accounting which persits today. the new guy is no cure for that problem(i honestly believe he does not have a clue how bad it is). it usually takes an outside force (quantum leap) to radically change anything. i think the time is here for the attorneys general to be that force and may god have mercy on mothermutual.
The money here is chump change. There was no bad accounting, no two sets of books, no embezzlement. He bent rules and found loopholes, but did not steal. No smoking gun will be found. Therein lies the problem and the reason that Massmutual used the scattergun approach to get rid of him. Regarding the trumped up charges, I think you have to come up with reasons. You can’t just say, the guy is nasty, off with his head, just like when he got rid of people, he had to give reasons,
Massmutual proposed it would Have Paid Class Members “Zero” (0), Two Class Reps $350,000, and Class Counsel $5 Million Cash, $3 Million in Insurance, and $250,000 Annually for Life
dear brinks some people never never have the opportunity to be fired what a shame otherwise you could learned YOUR EMPLOYER DOES NOT HAVE TO GIVE YOU A REASON TO FIRE YOU. legally speaking they are better off if they do not so they will not need to defend their position.
It is hard, even in court, to defend a LIE.
Did you hear rumors that SEC started investigatinv MM’s books/accounting?
Republican bigwig Marc Racicot helped orchestrate the downfall of chairman and CEO Robert O’Connell.
Racicot, former governor of Montana and chairman of last year’s Bush-Cheney campaign, had first arranged for O’Connell to be investigated by the law firm of Bracewell & Giuliani.
Racicot happens to be a partner there. And so, since March, is former New York mayor Rudy Giuliani.
I have worked with MM in the past and have found it to be a steady, focused company delivering solid results managed by a highly competant,ethical leadership team. When Bob O’Connell took over something seemed to change. Truth is always found on both sides but something about the core integrity of MM seems to have been lost. It is a shame to watch the current spectable unfold. MM current leadership, assuming more truth on their side, ought to just come clean with all parties and end this PR fiaso.
Robert J. O’Connell tried unsuccessfully in April to fire the head of the company’s Oppenheimer funds unit after an O’Connell confidant at Oppenheimer said he was harassed for raising questions about the mutual funds’ accounting and compliance procedures…
Brinks, who are you replying to? was it me? i don’t think anyone embezzled money. What i said was that Murphy used some aggressive (to say the least) accounting policies at Oppenheimer to prop up flagging results. No embezzlement to personal accounts occurred (at least not that i’m aware). I believe the SEC should take a very close look at the oppy books. Especially those divisions reporting direct to Murphy.
This is true. For over a year before this whole mess, Robert O’Connell was trying to put a certain division of Oppenheimer under Andrew Ruotolo’s supervision because he suspected dodgy accounting practices by Murphy and his cohort. Murphy stonewalled and prevented the transfer, attacking ruotolo on all fronts as well, which was one reason O’Connell was forced to bring Ruotolo to Massmutual as an advisor to the Chairman and CEO. Ruotolo knows where all the bodies are buried in Murphy’s domain at Oppenheimer which was why Murphy had to move quickly to remove him….If the SEC and AG are competent in the least, they will pour through the Oppenheimer books immediately. I suspect there has been some late night paper shredding going on for some time now…
Here we go, once again AIN’T NO MISSING MONEY. Bob does not have a hundred million dollars stashed away in a Swiss bank account. If he did he would not have gone begging to the board for a lousy ten million yesterday. His butt buddy, Andrew also does not have a Swiss bank account. His girlfriend Sue and her butt buddy, Ann also do not have Swiss bank accounts. The new regime does not have Swiss bank accounts. AIN’T no missing money. Is this about money? Well, yes, but not that way. Money comes into the picture in terms of salaries, bonuses, and raises. It previously came into the picture in terms of jet fuel, nepotism and padded expense accounts and that sort of thing. Chump change. Nobody will be charged with embezzlement, nobody will go to prison for embezzlement because there was no embezzlement. MassMutual will take a financial hit in terms that people might not be inclined to buy an insurance policy from them right now. Folks might also invest their money with another family of mutual funds. This will blow over. MassMutual is a great company that had a horible CEO. If MassMutual was a stock company and I was a stockholder I would be totally ripped because I would have lost a bundle in the last month, but MassMutual is not a stock company. Speaking of which, if MassMutual was a stock company this whole affair would have unfolded in an entirely different way. 80% of my net worth is with MassMutual, mostly with Oppenheimer but also my 401K. Shortly, I start collecting my retirement pension from MassMutual. I also have three insurance policies with MassMutual and I have zero worries, and I am a worrying kind of guy. I also have a confession, as I look at my desk there are a couple of pens and a couple of pads of post-it notes that are the property of MassMutual. So maybe I am guilty of embezzlement as well. I do find it curious that we have not heard a squeak from Sue, Ann or Andrew. I suspect that they were given hush money. Oh yes, Sue piped up to say that she did not or was not having an affair with Bob, she lied.
so embezzling is a crime but co-mingling accounts is not a crime?, wrong and inappropriate accounting is not a crime?
the sec is (opps)should look into these practices at all levels.
My concern is that a lot of people are getting the impression that embezzelment and missing funds is what happened, rather than creative accounting to make the botom line look better in order to get bigger raises and bonuses. Big, big difference. I think that a lot of people are also misreading what Bob’s son did as giving out insider trading information (akin to Martha Stewart) rather than giving out an investment tip. There are misdemeanors and there are felonies and there seems to be a lot of confusion between the two happening here. If you got busted for the use of steriods, would you like to be charged for using crack? No Enron here.
Re: your creative accounting to make the botom line look better in order to get bigger raises and bonuses, do you know that statutory accounting hide gains/losses in surpluse account, not income statement? When bonuses are based on income statement without considering hidden losses in surplus account, that’s same as your “accounting to make the botton line look better in order to get bigger raises and bonuses.”
If you cannot face reality, don’t read articles. JUST PRAY!
Reality? The reality is that there is no evidence of creative accounting. The reality is that I certainly don’t approve of creative accounting. The reality is, that under the law, creative accounting is usually considered a lesser offense than embezzlement. The reality is, I am not at all worried about the solvency of MassMutual, are you?
You sound very ignorant on issues, and stubbern. You did not provide any evidence to support your pure argument that there is no embezzlement nor creative accounting. Nor your sound you posssess sophisticated accounting knowledge.
Why don’t you save your energy until the investigation/examinations are over.
That’s why currently there are several investigation/examination are going on.
Isn’t it time to stop being an apologist for a vile human being like Bob O?
His abuse of power and privilege is as well known as his cruelty. Since you seem to represent him, did he ever tell you the one, going back about 15 years ago, when he fired a subordinate on Christmas Eve for the offense of padding his expense report by $25?
As for your screed on post 9/11 air travel, dollars to doughnuts he was abusing the corporate jet access well before then.
Your “all the other CEOs do it” excuse is offensive to the countless number of C level execs who do not abuse their power.
It isn’t me who said “all the other CEOs do it”. But I think s/he made a point.
I do not take Bob’s side. But I do not buy the argument that Bob was the only evil. Obviously current executives did not confront the evil, Bob, and received fat compensation/benefits.
Board members blame Bob using private jet, but the board member personally takes profits in investigating Bob.
James Birley’s ethics speech..Stu Reese’ open door policy… I say bunch of baloney…
There is no reason to believe the CEO would enjoy sudden riches if he were to lead the charge for a demutualization of the company.
He might not get much stock. In the case of mutual insurance companies, the policy-holders are the owners who are offered the stock in a demutualization. His proportional ownership through his insurance policies might entitle him to very littel stock.
However, he and his fellow executives are positioned to create some generous stock option packages that vest over time.
Still, it’s hard to beat a personal stock market account where one can pretend to receive huge allocations of hot IPOs and then pocket the mythical profits as real cash. That beats a real insurance company IPO any day.
the reason this is a figment of immaginary flight is MotherMass cannot IPO since it lacks the accounting needed to pass mustard. end of story.
Say this is a lot more fun than who got extra air miles and a little extra cushion pushing ala massmutual.
Keep up the good work, those little rascals would like to make you think its about something sexy but its not…follow the money!!!!
I was reviewing the GAAP RCGs for derivative open positions as of 4/30/05. It appears as though there were huge gains recognized in April, as the balance at 3/31/05 was $215 million loss and the balance at 4/30/05 was $6 million loss, a difference of $209 million gain
Part of the mismatch was due to a misinterpretation of ALM results during the quarter; and adjustment for equity-related assets was double counted (i.e. incorrectly applied on the asset side, since the liabilities already incorporated the adjustment).
The variance between our values and the broker mark values for swaptions indicates an misstatement of the Derivative Statement Values by approximately $1.2m.
a regulator with a conscience.
da_mut, how is it that you know about accounting irregularities within the firm? Are you an employee or are you a regulator?
Who is Ruotolo? He got fired too. What did he do?
do the name bernie evers ring a bell??
the problem was bernie told his “people” he wanted a higher standard set every quarter. So shall it be written so shall it be done! to do the impossible you got to look the other way, the same goes for mom mutual. numerous external auditors over a short time period indicates somebody is “shopping”. also means their internal structure suffers and decays and within a given period of time the agency hounds smell the rotting fleash and pursue it into extinction.
commingling in MM
Would you please expand on your cryptic remark?
Conflicting interest
If you can stand yet another episode in the continuing saga of former Gov. Marc Racicot, here goes. Apparently he sits on the board of MassMutual, an insurance giant which recently fired its CEO, Robert J. O’Connell.
Mr. O’Connell’s dismissal, for â€Åâ€Ŕalleged abuse of power and self-dealing,†was based on a report and a follow-up prepared by a private investigator and Bracewell & Giuliani, where Mr. Racicot is a partner. Mr. Racicot reportedly headed up the board’s inquiry and selected the firm.
“Ebbers”
“Flesh”
thanks for the informed insight…..
Scarcity of current systems resources
Massmutual does not comply with hedge accounting requirements, but reports to NAIC all derivatives as hedging.
Sounds similar to Fannie Mae’s situation?
Massmutual selected and applied accounting policies to improperly reduce earnings volatility. Per NAIC, the practice is not appropriate.
Isn’ this what happened at Fannie Mae?
lacking FASB required bifurcation of embedded derivatives.
No valuation system to value embedded derivatives.
Massmutual and its funds manage complex derivatives. The head of accounting never heard of “covered call”. Meaning, the head of accounting never read Statutory accounting no. 86.
TO: MM funds participants
Under MM funds contracts, MM is legally responsible for fair valuation/accounting.
I have documents that evidence egregogious mistatement. For more information, contact
dpdpf@netscape.net
i heard that tapes of MM supervisors discussing ways to obfuscate agency auditors are available?? heard of any??
Why is it I do not see Jessie Jackson or al Shark down in New Orleans stopping their people for stealing. Jessie and Al you must be so proud of them.
I feel sorry for Bill Corsby who is trying to help his people. Unlike you Jessie and Al – You want to keep them down and I must say you are doing a great job at it.
dear mary the moran,
pls read the book “black like me” published about tha timeyou were in grade school. if this is too contemporary read “people of the abyss” by jack london.
after you do then to to any downtown to any city usa after the suite and tie crowd has vacated and sit around and see what you see. go back to your house and tell your kids about your experience. sometimes the messager is not to our liking but the message must be preserved.
Looks like Tyler Dooeerr and Laura Lightzinger are axed.
Jim Birle is a class act. He is the guy you’d want in there, if there was a problem. He is brilliant,and a great guy. His resume is amazing, but he is a modest man. He is on that board because his reputation is beyoubd reproach. If you work there,be thankful he is there to help. You need men like him that have integrity, when anything questionable happens. Just my opinion,Sincerly,Doug
See DENTAL ECONOMICS MAGAZINE Feb. 2005
by Dr. Brian Weiss entitled \”DENIED\”
Here it is 2007, 2 years later, and MassMutual has managed, by constantly changing the necessary documentation, never receiving necessary documentation, and just not responding to calls and letters have spun out a case for ten months while they investigate that Social Security has already been approved for the disability that they are contesting as nonexistent.
So a policy with a 90 day waiting period stretches to 10 months while savings are spent, credit is exhausted, the home is mortgaged to the hilt and it looks as if selling the car is next.
We paid 10 years of premiums so we could either go to the poorhouse or else take MassMutual’s lowball offer when it comes out of desperation?
Wonder if the CEO would loan me a couple of bucks for groceries?
i tried to tell u guys for years these are all basic assholes